Mapping a New Era for Latin America, the United States, and Europe
President Obama's trip to Mexico and Costa Rica has put Latin America back at the center of Washington's foreign policy debate, for a few days at least. The visit comes at a time when Secretary of State John Kerry has not yet visited the region nor given any important speech on Latin American affairs. It remains unclear whether the Administration will offer any new vision for US relations with Latin America, after four years of relative absence.
But it is somewhat of an open question whether Latin America even wants more attention from Washington. The private sectors of Latin America and the United States -- as well as Canada and the EU -- are charging ahead with trade and investment of an unprecedented intensity. What does this portend for the future of our political relationships?
This is the central question that the Atlantic Council's new Adrienne Arsht Latin America Center seeks to answer in its founding report, The Trilateral Bond: Mapping a New Era for Latin America, the United States, and Europe. Written by a Transatlantic Task Force on Latin America composed of business leaders, academic experts, and policymakers and co-chaired by former Spanish Prime Minister Jose Maria Aznar and Senator Chris Dodd, our report tackles the common issues facing the US, Europe, and Latin America based on a new transatlantic partnership.
We argue in the report that "together, the United States, Europe, and Latin America should build a stronger, more equal trilateral partnership based on a community of interests and values -- this is in the economic, security and political interests of all three. Despite Latin America's expanding markets, rich energy and natural resources, and newfound confidence on the geopolitical stage, it has not been visible within the transatlantic relationship." Engaging Latin America as a peer in this relationship is the premise upon which progress in all other spheres -- economic, diplomatic, security, human rights and energy -- must be based.
Over the past decade, the region has grown faster than either the U.S. or the EU, which has returned to recession. Economic instability in the U.S. used to seriously disrupt its neighbors to the south, but Latin America weathered the 2008 crisis well, shrinking less and returning to growth faster.
It has also continued its deep economic ties with the U.S. and Europe: "The European Union is the largest single foreign investor in Latin America, accounting for 39 percent of total FDI in the region in 2011. The EU is also the leading recipient of Brazilian exports and its first trading partner, importing primarily agricultural goods and accounting for 21.7 percent of Brazil's total trade. The United States is the largest single national investor in the region and supplied 18 percent of total FDI there in 2011," according to our report. But at the same time, Latin America is diversifying and coming into its own as a player in international trade. The rise of multilatinas (Latin American multinationals) that are investing in places like Africa and China mean that the region's outward foreign direct investment has more than quadrupled since 2000.
Countries like Brazil, Colombia, Mexico, Chile and Peru have all been transforming into mature markets. This means the freedom to pursue new trade opportunities, and the independence to chart its own course, without it threatening the foundations of our partnerships. Relations must continue to become more rational, more pragmatic, and more equal, as Latin America becomes more integrated with the rest of the world.
There are also challenges to a renewed transatlantic partnership, as we detail in the report. An important swathe of Latin America seems to have no desire for a better relationship, led by Venezuela, Bolivia, and Nicaragua -- instead, their northern neighbors are more useful as targets for domestic political populism. And the ongoing crisis of the Eurozone makes it more difficult for the EU to focus on its common foreign policy.
Nonetheless, with Latin America on the rise, there are many areas for cooperation, and many problems that demand closer ties. In a community of nations that shares a common set of historical references, philosophical roots, and cultural touchstones, a more active political and economic alliance must be the aspiration for policymakers, business, and thought leaders alike. In practice, our report touches on many of these specific areas, providing concrete recommendations for action. Some of these include:
Building a stronger trilateral transatlantic marketplace. "The three regions should work to build a transatlantic economy by reducing barriers, expanding trade, increasing capital investment, and boosting competitiveness. Using the opportunity presented by the Transatlantic Trade and Investment Partnership (TTIP) negotiations, the three should establish a trilateral process aimed at removing barriers to trade and investment. Eventually, this dialogue should address the controversial topic of reducing US and EU agricultural subsidies that effectively restrict Latin America's most important export sector from those markets."
Launching a comprehensive trilateral energy dialogue to address the shifting global energy landscape and to share best practices across the broad sector of energy policy. "Latin America is already a major producer of energy, including oil and gas, hydro-electric and thermal energy, and biofuels. A stronger resource partnership would provide a strategic boost for a new transatlantic community as it seeks to remain competitive in an evolving global economy."
Addressing transnational crime and boosting public security. "The drug trade has for too long been identified with Latin America alone. In reality, it is a transatlantic -- even global-phenomenon that affects both day-to-day citizen security and the consolidation of democratic institutions. The United States and the European Union should expand efforts to prevent, treat, and reduce the harm associated with drug use and take steps to limit the cross-border flow of deadly assault weapons. These weapons spawn violence on America's streets and find their way wholesale to Latin America."
Education and human capital deserve their own chapter, given that the success of almost all other initiatives will be based on them. While the US, the EU and Latin America all represent different levels of educational quality, they face similar challenges to preparing their students for a high-skill work force. Quality education is key to building competitiveness in a globalized marketplace, and as such is the cornerstone of economic growth. As Assistant Secretary of State Roberta Jacobson argued at the report's launch, the middle class cannot continue to grow without advances in education. The United States, Europe, and Latin America can work together to shape more effective education policy that drives innovation.
Human capital also touches on a timely debate in the U.S. -- immigration policy. Facilitating the movement of those with the ability to contribute to growth and innovation will reinforce the integration of the trilateral marketplace. As we argue, "this should include developing trilateral 'fast track' visa and border entry schemes for businesspeople as well as more visas for highly skilled individuals." In addition, "Governments should reduce legal and institutional barriers to crossover between universities and the private sector."
Finally, we argue that to pursue these goals, we must strengthen the trilateral institution frameworks that can ensure routine consultation and promote collaboration. Some existing institutions, such as the Organization of American States (OAS) and the EU-Latin American summit process can carry some of this weight. But there should be more trilateral integration, as well as more recognition of Latin America's growing importance within global multinational institutions such as the UN Security Council and the Organization for Economic Cooperation and Development (OECD).
After decades of economic and political turmoil, Latin America is taking its place as a transatlantic peer, closely related to the U.S. and Europe by a common history and shared aspirations. It is time for the three regions to recognize this reality, and reshape their relationship to reflect it.
Gabriel Sanchez Zinny is managing director at Blue Star Strategies in Washington, DC, and rapporteur and expert adviser to the Adrienne Arsht Latin America Center's Transatlantic Task Force on Latin America. This piece first appeared in The Huffington Post.